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Halftime Pt. 2: Could S&P Unit Actually Drive McGraw-Hill Higher?

With financial regulatory reform now law, Brian Kelly of Kanundrum Capital thinks credit agencies should see an increase in revenues.

"If the credit agencies can charge more because they have more liability," he says. "Then certainly their revenues will be better."

But FinReg changed the way the ratings agencies operate, says Jon Najarian of optionMONSTER.com, referring to how they can be legally liable in their research and ratings if they're used in public offerings. For that reason, he can't understand why Warren Buffett continues to hold Moody's .

"He's taken it in the backside on it," says Najarian of the New York City-based credit services provider. "I think he continues to take it because now that the FinRegs are in and they can't use the ratings the way they did, there's really no big reason for these guys to exist."

Kelly maintains that with increased liability due to FinReg, revenues should climb. That's one reason he's waiting for an earnings report Friday morning from McGraw-Hill, which operates ratings agency Standard & Poor's. He's also interested in the New York City-based company's take on changes to asset-backed securities due to the new financial regulations.

Earnings Reports to Watch

After the closing bell Thursday, a cluster of prominent companies are scheduled to report quarterly earnings, including Microsoft , American Express , Capital One Financial , Mosaic and Amazon.com.

Earlier this week, Amazon raised eyebrows when it released a statement ahead of earnings, which said it's now selling more electronic books for its Kindle device than hardcover books.

"It seems odd to me that they would make that comment ahead of earnings," says Guy Adami of Drakon Capital. "It makes me think that maybe they're setting up for a bit of a disappointment."

A lot of analysts will be focusing on margins, notes host Melissa Lee, especially given the shift from hardcover books to electronic ones. With the margin is estimated to be at 8.6%, Steve Grasso of Stuart Frankel does not like the valuation at current levels.

"The action today doesn't dictate where we're going tomorrow," says Grasso. "But I think we're going to be under pressure probably in the next couple weeks or so with Amazon."

Brian Kelly of Kanundrum Capital will be watching Amazon's earnings report, as he thinks it will provide a gauge of consumer confidence.

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UNDER THE RADAR: TOBACCO NAMES POP

Tobacco names pushed higher Thursday, as earnings reports from Philip Morris International and Reynolds American beat the Street's estimates.

A large part of Reynolds American's success, says CEO Susan Ivey while on Thursday's Fast Money Halftime Report, is its mix of products. The maker of Camel, Pall Mall, Winston, Kool, Doral and other cigarette brands, the Winston-Salem, N.C.-based company also produces smokeless and moist tobacco products. Use of those traditional cigarettes, Ivey says, has been declining in the US market for more than 20 years—currently losing 5% sales a year. Smokeless, however, is growing at a 6% clip and margins are close to 50% with the cigarette side at 28%.

Ivey thinks there is good long-term growth for smokeless products, where there are still 42 million smokers in the US and up to 8 million who use moist. She says some individuals are moving from traditional tobacco to smokeless and others are starting with the "modern" products.

What's the Trade?

Jon Najarian of optionMONSTER.com would be long tobacco names.

"I think Asian growth is going to be huge for these guys," he says. "Very healthy for the company. Not so sure about the consumers."

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CALL THE CLOSE

"If we can get through 1100, I think you can get a tradable rally here," says Brian Kelly of Kanundrum Capital. "Above 1100, I'm a buyer."

Steve Grasso of Stuart Frankel says he would sell around 1100. He would buy around 1065.

Jon Najarian of optionMONSTER.com thinks the market could trade sideways Thursday.

Like Najarian, Guy Adami of Drakon Capital thinks the market won't move much either way.

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Trader disclosure: On July 22, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Kelly owns (BP) puts; Kelly is short (GS); Jon Najarian owns (AAPL) calls; Jon Najarian owns (BIIB) and (BIIB) calls; Jon Najarian owns (SNDK) calls; Jon Najarian owns (BIDU); Jon Najarian owns (JBLU); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST)

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